India’s Falling FX Buffer Prompts Calls for Softer Rupee Defense

The Reserve Bank of India’s recent defense of the rupee is weighing on the nation’s foreign exchange reserves, prompting calls from some analysts to scale back future intervention.

India’s forex assets, excluding gold, are now just enough to cover for 8.7 months of imports, the lowest in three years, according to data compiled by Bloomberg. The rupee weakness comes at a time when India is facing a rising import bill due to higher energy prices, with implications for both its economy and markets.